Doctors Ask: What Do You Mean, Cosmetic Tax?

Nov. 23, 2009

By LAUREN COXABC News Medical Unit

Tucked into the last hundred pages of Sen. Harry Reid's proposed health care bill is a 5 percent tax on cosmetic surgery that has doctors from various specialties wondering if they will soon become tax collectors who must also interpret the tax code.

If the bill passes as it was proposed Nov. 18, doctors will be asked to collect tax on surgical procedures that fall under the bill's definition of "cosmetic," regardless of whether the procedure is covered by insurance. If the doctors don't collect the tax, they are responsible for paying it.

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The American Academy of Cosmetic Surgery was quick to criticize the tax as an affront to middle-class women. Dr. Patrick McMenamin, the group's president, said 86 percent of cosmetic surgery patients are working women between the ages of 35 and 50, with an average income of $55,000 a year.

A nationwide 5 percent tax on cosmetic surgeries would amount to $5 billion to $8 billion a year, according to McMenamin's estimates.

But he and other doctors point out that New Jersey -- the only state to impose a cosmetic surgery tax -- generates 59 percent less money in taxes than projected.

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"As in New Jersey, the federal government will probably invest $3 to $5 for every dollar collected," said Dr. Robert Weiss, immediate past president of the American Society for Dermatologic Surgery.

Doctors from other specialties also worry that the language of the bill could open a Pandora's box of confusion about which procedures are cosmetic for some patients, and which are not for others.

"They're trying to say they're going to tax cosmetic, and not tax reconstructive surgery, but the way it's written, it's leaving itself wide open," said Dr. Mitchell Roslin, chief of bariatric surgery at Lenox Hill Hospital in New York City.

Reid's press office did not respond to a request for comment on doctors' criticism or confusion about the tax.

But a spokesperson for the Nevada Democrat confirmed by e-mail that, "The tax applies to any cosmetic surgery or other similar procedure which is performed by a licensed medical professional and is not necessary to ameliorate a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or disfiguring disease."

Doctors Unsure If Bill Would Make Them Tax Interpreters

Such language is adapted from the IRS tax code prohibiting people from taking tax deductions on cosmetic surgeries. Make a mistake, and IRS might initiate an audit.

But, in the case of the Reid bill, it's unclear if it would be up to the physician performing a procedure to decide whether to collect a tax. And doctors see plenty of gray areas where the law would potentially tax patients who are in need of legitimate care, or allow doctors to fudge what is non-cosmetic.

For instance, Roslin of Lenox Hill hospital said, 10 percent of his patients who go through bariatric weight loss surgery then choose to have excess skin removed. The tummy tucks, face lifts, full body tucks or reconstruction for breasts that "sag down like water bottles" from years of excess weight could all be construed as cosmetic. But words such as "congenital" might confuse the argument.

"Obesity is a congenital disease: 70 percent of variants of height and weight are influenced by your genes," Roslin said, alluding to the "congenital abnormality" exception in the bill's cosmetic procedures definition.